The Future of Business Operations is here - The Digital OneOffice™

Monthly Archives: Sep 2008

With the whole of Wall St being restructured and substantial investment being primed to re-vitalize the financial services sector, what will be the short-medium term impact on the outsourcing industry?

I've been trying to get my head around the looming crisis on Wall St. the past few days, and the situation is far more severe than when we discussed the sub-prime crisisa few months ago.

Normally, I'm quick to pounce with my thoughts and opinions (as if you didn't know that already), but I've been truly perplexed by the goings on - and the potential magnitude - of the potential outcome to global markets. I cling to the hope that the bail-out package will quickly steady the economy and spark a mini-revival, despite the long-term ramifications of paying back this debt - and our children footing the bill too. So what does this mean to the outsourcing industry?

Historically, tough economies have proved to be lucrative markets for increased outsourcing: remember the 2001 recession and subsequent deal activity. However, this situation will have a two-pronged impact on the outsourcing industry:

1. Outsourcing drivers: Merger activity is going to provide new outsourcing opportunities, for example the Bank of America, with its acquisition of Merril Lynch, will surely look to move Merrill's support functions onto third-party resources, as BoA has a strong and effective outsourcing culture. And the newly-merged entity may have to look at additional or new providers to support the broader global presence of the new firm - especially when you take into account Merrill's international operations. We can also expect to see a host of other M&A events taking place in the coming weeks (i.e. JP Morgan taking over Washington Mutual's assets, and CitiGroup taking over Wachovia and its global BPO operations). In addition to M&A activity,

The recentarticle on Polandcertainly stoked up some creative discussion about sourcing BPO locations. And none more so than from Ratnesh Mathur,a BPO guru from India, based in Central Europe. Ratnesh has worked in the "outsourcing temples" of Citibank and Infosys, in both India and Europe, for over 17 years.These days, he spends his time traveling to lesser known places in India and Europe, and, when not traveling or working on his upcoming book on Indoeuropean linguistic/cultural links, you can seek his blessings on outsourcing advisory work in India & Europe, through social networks likeLinked-in. Anyway, I thought Ratnesh's recent contributions warranted a full-posting:

When selecting a BPO location inside the European Union and in India, its useful to first segregate the City-level metrics from the Country(EU)/State(India)-level metrics and then quantify relative-importance of each metric vis-a-vis others, specific to your unique need:

Jason Averbrook on HR and technology: the core theme is about how HR needs to reach outside of the organization to drive performance inside. And technology and social networking tools arethe enabler to make this happen. Here are some of the sound-bites:

"What we thought we were getting from technology is not what we have. We outsourced benefits and payroll, so what are we left with - an address book, and IT tells us it'll cost a million dollars to upgrade!"

Been listening to some excellent discussions at Mercer's client event, where the central theme is all about globalization. Mercer's Jeff Miller and Julia Velixon discussed the results of their new study, conducted with the Harvard Business School, based on interviews with senior HR leaders from 60 global corporations. Some key points of note:

Workforces are becoming more globally-dispersed. More than 50% of respondents' workforces reside outside of their corporate home country - the pressure to standardize policies and processes, manage increased workforce mobility and manage compliance needs is greater than ever;

Many senior HR executives are stepping up into global roles, but are finding the transition challenging. 45% of the executives have moved into global roles over the last two-to-three years - many of these transitioned in the last year alone. However, while roles are being structured globally, most of the executives have been struggling to get away from dealing with local and regional issues.

Lack of standardization. The lack of a consistent approach to governance and compliance, especially in Europe and Asia - where employment and tax laws vary widely in different jurisdictions - creates further challenges for HR leaders. There is also a lack of standardization around the approach to global mobility, which hinder's HR's ability to apply consistent procedures to the compensation and benefits of a workforce that has been growing rapidly. It is becoming increasingly important for companies to properly manage the logistics of moving there employees from country to country.

Washington D.C.this week: I have the privilege of delivering a keynote address to Mercer's clients on the subject entitled "Creating a Strategic Enterprise Sourcing Strategy and Governing Change" (whatever will I think up next...). I look forward to posting some banter from their conference, where the central theme is "Successfully Managing the Global Journey". I am particularly interested to hear Jeff Miller and Juila Velixon discuss Mercer's recent study conducted with the Harvard Business School on global service delivery models. I promise to share the findings here. Am also looking forward to hearing Jason Averbrook (great blog by the way) attempting to tie together web 2.0, new HR technologies and outsourcing. Big topics - I love it :)

San Francisco and New York next week: I am more excited than usual at the prospect of attending Oracle OpenWorld this year. Both Oracle and SAP's signature events have fast taken-over as industry meets to anyone in the hi-tech and services businesses. If you are there and want to meet up, drop me a mail. What's exciting this year is the stage they are giving to BPO - come visit the panel discussion entitled the "The Good, The Bad and The Ugly", Moscone South, 307 at 5.30pm on Monday. I'll be joined on the panel with my long-time industry cohorts Stan LePeak (Equaterra) and Mark Stelzner (Inflexion Advisors). I'll be spending the latter half of the week in Manhattan where I have brought together some of the leading minds in the BPO industry for a behind-closed-doors round-table (no vendors allowed...sorry).

London and India: Am making plans to visit London and India later in November and December, so look forward to meeting up with many of you during my travels.

I received a very interesting synopsis from a senior executive at one of the major global IT-BPO providers on the subject of Poland as an offshore delivery location. From my own personal experience, Poland has proved to be a first-class location for high-quality, multi-lingual support, particularly for BPO functions such as finance and HR. No wonder providers such as Accenture, ADP, Capgemini, Genpact, HCL, HP and IBM have all made significant investments there, in addition to many captive centers that have been established there in recent years.

Siddhartha makes some excellent points, most notably that Poland is simply not an "alternative offshore location", as its value-proposition is not driven by scale and low-cost, but by highly-motivated and educated staff, and is a proven first-class hub for multi-lingual European language support. He also makes a bold assumption that Poland has the potential to be challenging the unique expertise of a country such as Israel, as Poland possesses far more potential that simply being a BPO / shared services location. In many instances, clients have not found significant cost savings using Polish delivery resources - they have used them because of the value and quality they bring to a global delivery model. Over to you Siddhartha:

Bristol Myres Squibb today joined a rare breed of enterprises which have bundled apps and business process to two suppliers across finance and HR towers, with the announcement today that Accenture has taken on a 10-year $550m engagement to take on the pharma giant's finance and accounting processes and related application development and management services. This follows on from their recent $324m 10-year deal signed with IBM that covered Human Resources BPO and related applications services.

This strategy builds firmly on our recent discussion on bundling apps, and the related business processes supported by those apps, under a single supplier. This deal is just the latest in a series of contracts where the buyer is clearly recognizing the synergies of tying together process design, knowledge transfer and governance across IT and operations "boundaries". Bundled outsourcing is not the answer for everyone, but it can provide a major spur for some companies looking to shake-up their back office functions, provided the vendor can demonstrate the skills and business understanding to drive this agenda. These "boundaries" shouldn't exist, and bundled BPO is one potential solution that can help eliminate them. (Much) more on this topic to follow...

We completed our survey looking at the world of third-party sourcing advisors this week, with the high-level results being discussed by my friend Ed Nair, over atGlobal Services Media.

One of the key takeways, which I wanted to share with you, is the importance of the sourcing advisor / vendor relationship. Of the 114 advisors who completed their section of the study, almost half of them revealed they frequently get business through their relationships with vendors. We always knew that vendors refer advisors in certain client instances, but not to this extent:

Great Britain's Andy Murray (OK, he's a Scott, but we'll have him anyway), goes for our first major tennis tournament victory in 72 years tonight against the mightyFed Express in the US Open final. The player, whom our former tennis icon Tim Henman recently described as a "miserable git", proves that being a nice guy doesn't always win you trophies...

I seem to get pulled into daily discussions from people trying to get a blog off the ground. There appears to be a common misconception that all you have to do is post something and thousands of people will flock to your site, eager to listen to your rhetoric and add their own views. I have literally lost count of the number of bloggers who put out a few posts, only to leave the thing stranded gathering web-dust. Cyberspace is littered with blog-junk that clutters web-searches and gives the impression their owner fell off a cliff or experienced some other inexplicable disappearing occurrence. Bottom-line - if you're going to start a blog, stick with it.